“We’re at a position where last year and this fiscal year are just a challenge, and again, based on the long-term projections, you can see there’s still good days ahead, but these two years are the challenge that we’re facing,” Lewis said. “I feel like we’re in a good space.”
The 2019 fiscal year, which ended June 30, completely wiped out the $6.7 million fund balance, which is now projected to be $4.7 million in the red by next June. The 2019 budget was originally projected to run at a $3.1 million deficit, but the coaching transition from Paul Johnson to Geoff Collins was an unbudgeted expenditure that cost about $6 million, bringing spending to $91.9 million against $82.3 million in revenues.
However, Lewis has plotted significant revenue increases in following years. Besides the soon-to-launch ACC Network and the series at Mercedes-Benz Stadium, Tech also will renegotiate its multi-media rights contract with IMG ahead in coming years.
In fiscal years 2021-25, Lewis projects revenues of, in order, $91 million, $92.2 million, $101.3 million, $100.5 million and $99.8 million. With the increased revenue, the department projects to have its fund balance — its rainy-day fund to cover unbudgeted expenses such as coaching changes — restored above its targeted level of $5 million in fiscal year 2023.
The revenues for this coming year include $31.8 million from the ACC, up from $28 million this past year. The bump includes an estimated $1 million in new revenue from the ACC Network, a forecast that Lewis calls conservative.
The projected revenues in the future would allow Tech teams far more flexibility than they have enjoyed in past years, as well as the year about to start. When teams submitted their proposed budgets for the 2019-20 academic year, Lewis had to put the brakes on several wish-list items from the department’s coaches.
After tabulating the teams’ initial budget proposals put forth by each varsity team, Lewis said that the overall budget deficit would have been about $9 million before he had the teams pare down their requests so the deficit for the year was reduced to the projected $1.7 million.
That does mean, though, that Yellow Jackets teams will go into 2019-20 without $7.3 million in expenditures that they were hoping to be able to make to compete in the ACC. The trimmed expenses included additional personnel, facility enhancements and travel.
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The initial budget projection forecasts $84 million in revenues and expenses of $85.7 million to account for the $1.7 million deficit.
The budget does include a few new personnel additions, including a full-time sports psychologist and hires in nutrition and strength and conditioning.
Said Lewis, “I think we have what we need to operate next year.”
Lewis has another critical task ahead — refinancing two bonds that call upon Tech to repay $30 million in October and another $30 million in 2022. Known as bullet or balloon payments, they were built into the bonds (which were taken out to pay for McCamish Pavilion and the Byers Tennis Complex, among other things) with the expectation that they would be refinanced and not paid at once, Lewis said.
Fortuitously, Tech will be able to take advantage of lower-than-usual interest rates to achieve some debt-service savings and also create a more stable debt structure in the process. Once the bonds are refinanced, the department projects annual debt payments no higher than $16 million through fiscal year 2038, $2 to $3 million less than they would be without the refinance. The department will manage those savings even while taking on $20 million more in debt, half for maintenance projects in Bobby Dodd Stadium and the other half to begin facilities upgrades for Russ Chandler Stadium (for which gifts have already been committed).
This past year’s $13.6 million debt service accounted for 15% of expenses in the past year’s budget, well above the ACC average of about 8%. For a $14 million annual debt payment (which is what Tech projects to pay in two years) to comprise 8% of expenses, Tech’s budget would have to be $175 million — about $84 million more than it is projected to be.
“It can be a challenge, but at the same time, we knew we had facilities issues, so that’s how you address them,” Lewis said.
At the board meeting, Stansbury reported that the department had almost reached $90 million in money raised for the $125 million capital campaign, known as Athletics Initiative 2020. With the campaign in full force, the department raised $50 million in the 2019 fiscal year, setting a record for the Alexander-Tharpe Fund (the department’s fund-raising office) and doubling the average intake.
The main objective at this point is securing funds for the renovation of the Edge Center. The $70 million project has a little more than $40 million in gifts. The plan is for the athletic department to not take on additional debt for the projects included in 2020.